Matthew Mini Coaches Ltd (in liq) v Scotch Myst Ltd
[2019] NZHC 3015
•19 November 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2019-404-001206
[2019] NZHC 3015
UNDER Part XVI of the Companies Act 1993 IN THE MATTER OF
a proceeding to put SCOTCH MYST LIMITED into liquidation
BETWEEN
MATTHEW MINI COACHES LIMITED (IN LIQUIDATION)
Plaintiff
AND
SCOTCH MYST LIMITED
Defendant
CIV-2019-404-001213 IN THE MATTER OF
a proceeding to put KIWI THUNDER LIMITED in liquidation
BETWEEN
MATTHEW MINI COACHES LIMITED (IN LIQUIDATION)
Plaintiff
AND
KIWI THUNDER LIMITED
Defendant
Hearing: 1 November 2019 Appearances:
S L Hawksworth for Plaintiff A J Steele for Defendant
Judgment:
19 November 2019
JUDGMENT OF ASSOCIATE JUDGE P J ANDREW
MATTHEW MINI COACHES LTD (IN LIQ) v SCOTCH MYST LTD [2019] NZHC 3015 [19 November 2019]
Introduction
[1] These liquidation proceedings are being heard together. In each case, the defendant company has failed to comply with a statutory demand and, in accordance with s 287 of the Companies Act 1993, both companies are presumed to be insolvent.
[2] Neither defendant company has filed a statement of defence within the 10- working day period provided for in r 31.17 of the High Court Rules 2016.
[3] Both defendant companies now apply, pursuant to r 31.20, for an extension of time to file statements of defence and for orders excusing their non-compliance with the High Court Rules.
[4] The plaintiff, the same company in both proceedings, opposes the applications on the grounds that neither company can satisfy the threshold test that they have an arguable defence to the plaintiff’s claims. The plaintiff also says that the evidence filed by the defendants does not refute the presumption of insolvency, the reasons for the delay are spurious and the overriding interests of justice mean that the applications should be dismissed.
Background facts
[5] The plaintiff, Matthew Mini Coaches Ltd (in liq), operated a rental vehicle business. On 23 March 2018, it was placed into liquidation on the application of the Commissioner of Inland Revenue. Vivian Judith Fatupaito was appointed liquidator.
[6]Stewart William Matthew is the sole director and shareholder of the plaintiff.
[7] The Inland Revenue Department (IRD) has filed a creditor’s claim in the plaintiff’s liquidation for a preferential debt totalling $452,848.71.
[8] Both defendant companies are related to the plaintiff company in that Mr Matthew is the sole director and shareholder of both defendants.
[9] On 19 February 2019, the plaintiff issued letters of demand on both defendants for debts that the plaintiff says the defendants owe it.
[10] On 17 April 2019, the plaintiff issued statutory demands against both defendants. The statutory demand in relation to the defendant, Scotch Myst Ltd, was
for the sum of $15,839. In relation to the defendant, Kiwi Thunder Ltd, the statutory demand was for the sum of $116,903. Neither defendant sought to set aside the respective statutory demands within the respective 10-working day period.
[11] On 30 April 2019, the solicitors for the plaintiff received, by post, a copy of an email dated 23 April 2019 from Mr Carr, the defendant companies’ accountant, acknowledging the defendants had received s 289 statutory demands and advising “that your client [the plaintiff] has been advised that the amounts due are in dispute”. Mr Carr asked the plaintiff to withdraw the demands and to provide details of the transactions claimed. The plaintiff’s solicitors did not receive the email because the email address was not entered correctly.
[12] It is apparent from the email document that Mr Carr first attempted to send the email on 17 April 2019 – and, in re-sending it on 23 April 2019 (again with the wrong address) and posting a copy to the plaintiff’s solicitor, Mr Carr must have been aware that there was doubt as to whether the plaintiff’s solicitors had ever received it.
[13] The solicitors for the plaintiff responded by letter dated 1 May 2019 (the following day), advising Mr Carr that the plaintiff did not consider there to be a genuine dispute in respect of the amount owing by either defendant and that it would not be withdrawing the statutory demands.
[14] The plaintiff did not receive any response to that letter or any further correspondence from the defendants prior to the applications for liquidation.
[15] On 20 June 2019, the plaintiff made application to this Court to liquidate both defendant companies. The liquidation proceedings were served on the defendant companies on 5 July 2019.
[16]On 16 July 2019, the plaintiff advertised both liquidation proceedings.
[17] The defendants made application on 6 August 2019 for leave to file statements of defence out of time. The liquidation proceedings were listed for a first call on 9 August 2019.
[18] Mr Matthew is also a shareholder and director of SW Matthew Holdings Ltd (SWMH). On 31 October 2019, that company sold a property at 7 Wellesley Road,
Mangere Bridge, Auckland, and, from the net proceeds of $1,250,187.31, the following sums have been paid into the Bruce Dell Law solicitor’s trust account:
(a)$8,500 in respect to the plaintiff’s claim against Scotch Myst Ltd; and
(b)$116,903 in respect of the plaintiff’s claim against Kiwi Thunder Ltd.
[19] In a memorandum filed by the defendants after the hearing and dated 4 November 2019, counsel for the defendants has recorded undertakings from Bruce Dell Law to retain the sums held by them as a “bond” for the plaintiff’s liquidator’s claimed debts against both defendants.
[20] The plaintiff has also filed liquidation proceedings against SWMH after it failed to respond to a statutory demand served on it on 5 July 2019. The liquidation proceedings are to be heard in this Court in February 2020.
Relevant legal principles
[21] If a defendant party fails to file a statement of defence, that defendant must not, without an order for extension of time granted on application made under r 31.22 or the special leave of the Court, be allowed to appear at the hearing of the proceeding.1
[22] The Court’s power to grant an extension is discretionary. The defendant must produce material of substance to justify the exercise of the discretion or, in other words, a proper foundation.2 Leave will not be granted to file a statement of defence out of time unless the defendant has, in the documents filed, an arguable defence for the whole amount claimed.3
[23] The relevant factors that typically apply to an application under r 31.22 were summarised in Body Corporate 62870 v Health Distributors (Holdings) Ltd:4
[6] Thus the threshold test is whether the defendant has an arguable defence, which it intends to pursue.
1 High Court Rules 2016, r 31.20.
2 Hurunui Estate (2002) Ltd v Hurunui Hotel (2004) Ltd [2015] NZHC 1152 at [9].
3 At [11]; and Fresh Cut Flower Wholesalers Ltd v Living and Giving Gift Co Ltd (2001) 16 PRNZ 173 (HC) at [9].
4 Body Corporate 62870 v Health Distributors (Holdings) Ltd [2018] NZHC 1717.
[7] If that test is satisfied, there are a number of factors which the Court may consider relevant … as identified in Hurunui Estate (2002) Ltd v Hurunui Hotel (2004) Ltd:5
(a)The period of the defendant’s delay and any explanation for it.
(b)The insolvency of the defendant which may cause it to waste funds on a defence which might more properly be handled by a proof of debt before the company’s liquidator.
(c)Prejudice caused to the defendant through extension of time (but with consequential costs usually able to be addressed by the imposition of conditions).
[8] Ultimately the Court’s exercise of its discretion is informed by the overall justice of the case.
[24] The solvency of the defendant company is of particular relevance. The Court has stated on a number of occasions that even if there is an arguable defence, leave should not be granted if the applicant is insolvent.6 Furthermore, liquidation proceedings in particular should not be protracted for procedural reasons, as the rules of the Court are designed to assist the speedy resolution of such proceedings.7
The issues
[25]In relation to each defendant company, the following three issues arise:
(a)Has each defendant demonstrated it has an arguable defence which it intends to pursue?
(b)Are the defendant companies solvent?
(c)Do the reasons for the delay and the overall interests of justice justify the indulgence sought?
[26] It is, of course, necessary to address each defendant company separately in relation to each of the three issues.
5 Hurunui Estate (2002) Ltd v Hurunui Hotel (2004) Ltd, above n 2, at [12]–[15].
6 Fresh Cut Flower Wholesalers Ltd v Living and Giving Gift Co Ltd, above n 3, at [9]. See also TK (Hong Kong) Ltd v Diamond Milk Formulas Ltd [2016] NZHC 2642 at [24] and [25(c)]. In Body Corporate 62870 v Health Distributors (Holdings) Ltd, above n 4, at [24], the Court stated that while not always decisive, the insolvency of the defendant company is a strong factor against the exercise of the Court’s discretion.
7 Hurunui Estate (2002) Ltd v Hurunui Hotel (2004) Ltd, above n 2, at [10]; and TK (Hong Kong) Ltd v Diamond Milk Formulas Ltd, above n 6, at [26].
Scotch Myst Ltd
Issue 1: Does Scotch Myst Ltd have an arguable defence to the plaintiff’s claim?
[27] The plaintiff’s claim against Scotch Myst initially totalled $15,839, comprising of transfers by the plaintiff to Scotch Myst totalling $8,500 (transfers) and payments, initially said to be in the amount of $7,339, made by the plaintiff in relation to rates and various utilities (property payments) for a property owned by Scotch Myst at 6 Wellesley Road, Mangere, Auckland.
[28] Since the proceedings were filed, the plaintiff has accepted that the amount of the property payments in dispute is now $2,135.82, such that the total debt now said to be owing by Scotch Myst is $10,635.82.
[29] Scotch Myst does not deny that the transfers and property payments were made to it, for its benefit, but says that those payments were properly paid by the plaintiff. Mr Matthew asserts that the transfers were reimbursements for the vehicles purchased by Scotch Myst for the plaintiff (a Nissan Tiida and a Toyota Ractis) and that the property payments were a contribution to the rates and utilities for the Wellesley Road property which were properly payable by the plaintiff due to the plaintiff’s use of the Wellesley Road property for business purposes.
[30] However, there is good reason to doubt the credibility and reliability of the evidence put forward by Scotch Myst:
(a)Mr Matthew’s evidence in respect of the vehicles purchased is inconsistent. He initially stated that the Toyota Ractis was a Toyota Raum and that those vehicles were unregistered. After the plaintiff filed evidence that it did not own any unregistered Nissan Tiida or a Toyota Raum, Mr Matthew amended his evidence, claiming that, following a conversation with the plaintiff’s mechanic (Mr Ruapuna), he had been reminded that it was actually a Toyota Ractis that had been purchased in October 2017 and that the Nissan Tiida had, in fact, been registered.
(b)I accept the submission of Mr Steele, for the defendants, that the statements made by Mr Ruapuna are not necessarily inadmissible hearsay and that on the face of the affidavit Mr Matthew could claim
that the conversation with Mr Ruapuna has simply triggered his recall. However, the amended contentions that Mr Matthew now makes are equally unconvincing.
(c)The only documentary evidence provided by Mr Matthew to support his assertions are bank account statements showing payments by Scotch Myst allegedly for the purchase of the vehicles for the plaintiff. However, the bank account statements do not show to whom those payments were made, nor has Mr Matthew provided any receipts or other company records proving that vehicles owned by the plaintiff were purchased by Scotch Myst. Furthermore, those bank accounts record payments made in August 2017 (not a purchase in October 2017) and the payments appear to have come into the Scotch Myst bank account and been paid out on the same day in circumstances where it appears that Scotch Myst was in a position to pay the expenses itself.
[31] I also find that there are good reasons to doubt the evidence of Scotch Myst in relation to the claimed property payments.
[32] The plaintiff concedes that, as Scotch Myst was not incorporated until 16 December 2014, it is not liable for payments made before that date. That has resulted in the recalculation of the property payments debt of $2,135.82.
[33] Mr Matthew says that the plaintiff leased a property on O’Rorke Street, Onehunga, Auckland, from a related company, SWMH. However, Mr Matthew does not explain why the plaintiff also needed to use the Wellesley Road property. Moreover, no evidence is provided showing the amounts actually due for the property payments, what percentage of those payments were paid for by the plaintiff and that the payments properly related to periods when the plaintiff used the Wellesley Road property.
[34] I accept the submission of Ms Hawksworth, for the plaintiff’s liquidator, that Mr Matthew, in his capacity as the director of the plaintiff, failed to ensure that the plaintiff kept adequate records and there is no reason to question the evidence of the liquidator that she has been unable to locate evidence in the plaintiff’s records that would support Scotch Myst’s assertions. It is clear that the various related companies
were run in a rather inter-related fashion, but that does not absolve Mr Matthew from his responsibilities to maintain adequate records. As the director, he ought to be best placed to provide a valid explanation (with supporting documentation) for the various payments made. He has failed to do so.
[35] The threshold that Scotch Myst must meet is to provide a sufficient evidential foundation to conclude that there is an arguable defence. The mere raising of some doubt and relying on an absence of documentation to create some uncertainty is not enough, particularly where the party relying on the absence of documents (here, Scotch Myst, which carries the evidential burden) had a responsibility to maintain adequate records.
[36] I conclude that Scotch Myst has not established that there is a genuine dispute in relation to either the transfers or the property payments.
Issue 2: Is Scotch Myst Ltd insolvent?
[37] Scotch Myst failed to pay a statutory demand served on it by the plaintiff. Accordingly, Scotch Myst is presumed to be insolvent. The plaintiff contends that Scotch Myst has not adequately refuted that presumption.
[38]Mr Matthew’s evidence is that Scotch Myst has total assets of approximately
$3,500,000. This comprises three properties:
(a)6 Wellesley Road, Mangere Bridge ($1,675,000);
(b)4 Nova Place, Point Chevalier ($610,0000); and
(c)161 Carrington Road, Mount Albert ($1,300,000)
[39] In a memorandum filed 4 November 2019, Mr Steele recorded that Bruce Dell Law undertakes to retain the sum of $8,500 in its solicitor’s trust account as a ‘bond’ for the plaintiff’s liquidator’s claimed debt against Scotch Myst, pending resolution of the challenge to that debt, and further undertakes not to release those funds without either the agreement of the parties to the proceedings involving Scotch Myst or order of the Court. The sum of $8,500 is part of the net proceeds of $1,270,187.31 that was
paid into the Brue Dell Lawyers solicitor’s trust account following the sale of the property of SWMH on 31 October 2019.
[40] In Mr Steele’s the memorandum dated 4 November 2019, the Court has also been advised that Mr Matthew, the director of SWMH, has instructed that:
(a)SWMH is able to pay its debts as they become due in the normal course of business and the value of the companies’ assets is greater than the value of its liabilities, including contingent liabilities, hence it is solvent; and
(b)SWMH was purely a landlord and is no longer trading, so the proceeds of sale are its only assets, and there are no material liabilities other than the claim that the plaintiff has already disclosed to the Court.
[41] I accept that the debt owed by Scotch Myst is a modest sum, but I find that the evidence of Mr Matthew and Scotch Myst fails to adequately rebut the presumption of insolvency and to demonstrate that Scotch Myst is both balance-sheet and cash- flow solvent in terms of s 4 of the Companies Act 1993.
[42] Mr Matthew has adduced no evidence as to Scotch Myst’s liability or its ability to meet its debts as and when they fall due in the normal course of business. Financial statements showing that Scotch Myst is both balance-sheet and cash-flow solvent have not been provided, despite Scotch Myst having chartered accountants.
[43] Furthermore, the Bruce Dell trust account deposit of $8,500 does not establish sufficient cash-flow in circumstances where the funds have been put up by another company. That company, namely SWMH, is itself the subject of a liquidation proceeding based on a failure to pay a statutory demand. It is presumed to be insolvent. I accept that the amount at issue in the SWMH liquidation matter is
$67,178, but there is no evidence filed in support of the instructions counsel has received from Mr Matthew, which are recorded at in the memorandum of 4 November 2019. (I do not doubt that the instructions are faithfully recorded). In the event of SWMH being placed into liquidation, the funds held as security would be unlikely to be available to Scotch Myst and the evidence, as filed, tends to show that Scotch Myst cannot offer its own security, even for a relatively modest sum of money. It appears
that, in substance, what Mr Matthew is doing is creating further debt to related companies to meet the current debt owed by Scotch Myst.
[44] I further note that if Scotch Myst is insolvent, that will not assist the plaintiff, as, if Scotch Myst is placed into liquidation, those funds will be available for the body of creditors.
Issue 3: Reasons for the delay and the overall interests of justice
[45] To explain the delay in seeking to file a statement of defence, or to take steps to challenge the plaintiff’s demand, it is said that Mr Matthew was absent from New Zealand for the periods of 23 April 2019 to 2 May 2019 in Hong Kong, 14 May 2019 to 11 June 2019 in Rarotonga and 27 June to 2 July 2019 in Darwin. Mr Carr is said to have been out of New Zealand between 6 July 2019 and 20 July 2019.
[46] However, I find that the above dates do not justify the indulgence sought by Scotch Myst or provide a sufficiently adequate explanation for the delay:
(a)The statutory demand was served on Scotch Myst’s registered office on 17 April 2019 and expired, unremedied, on 13 May 2019. Mr Matthew departed for overseas on “around” 23 April 2019. He then returned to New Zealand on 2 May 2019, four days before the time to set aside the statutory demand expired and 10 days before payment was required.
(b)Mr Matthew does not explain why he could not be contacted or provide instructions to Mr Carr and/or the defendant’s solicitors from overseas.
(c)On 30 April 2019, the plaintiff’s solicitors received, by post, a copy of an email from Mr Carr dated 23 April 2019. The solicitors responded on 1 May 2019 advising that the plaintiff did not consider there to be a genuine dispute in respect of the amount demanded and that the statutory demand would not be withdrawn. The defendant did not take any steps in respect of the statutory demand.
(d)On 5 July 2019, the plaintiffs served the liquidation application on Scotch Myst at its registered office. At that time, Mr Matthew was in New Zealand. He states that Scotch Myst did not file a defence because
Mr Carr was overseas at the relevant time. Given that Mr Matthew and the company had previously engaged Bruce Dell Law, it is not clear why Mr Matthew thought it necessary to wait for Mr Carr to return to New Zealand before seeking advice.
(e)Mr Matthew says he did not understand the seriousness of the liquidation proceedings. However, as noted, he is also the sole director of the plaintiff, which was put into liquidation by order of this Court on an application by the IRD. Given that Mr Matthew has recent and ongoing, first-hand experience of the seriousness of a liquidation proceeding, it does seem implausible that he would not have understood the implications of the documents served on Scotch Myst.
[47] I also find that the overall interests of justice do not favour the grant of the application made by Scotch Myst. Several months have passed since the statutory demand expired unremedied. Further delays must also be to the ultimate prejudice of the plaintiff’s creditors, who are owed approximately $1,320,000.
Conclusion – Scotch Myst Ltd
[48] I conclude that Scotch Myst has not established a proper basis for its application pursuant to r 31.22 for an order extending time to file a statement of defence. The application by Scotch Myst is accordingly dismissed.
Kiwi Thunder Ltd
Issue 4: Does Kiwi Thunder Ltd have an arguable defence to the plaintiff’s claim?
[49]The plaintiff’s claim against Kiwi Thunder totals $116,903 comprised of:
(a)$47,562.73, being the amount paid by the plaintiff on behalf, or for the benefit, of Kiwi Thunder to Pyro Co for fireworks (fireworks payments);
(b)$100,701.05, being the total amount of payments made by the plaintiff on behalf, or for the benefit, of Kiwi Thunder for expenses relating to the importation of fireworks (importation expenses); and
(c)$12,539.07, being the net amount owed by Kiwi Thunder to the plaintiff resulting from transfers to and from Kiwi Thunder and the plaintiff (transfers).
[50] Kiwi Thunder disputes that it owes these amounts to the plaintiff. Mr Matthew asserts that the amount of the fireworks payments of $47,562.73 and importation expenses of $100,701.05 do not make sense due to the total fireworks sales by Kiwi Thunder in 2017 ($173,434) and the cost directly incurred by Kiwi Thunder for fireworks in the same period ($97,313). Mr Matthew’s evidence is that total fireworks costs for 2017 should have been $96,000. That evidence is based on his experience selling fireworks and is set out in the draft financial statements for the year ending March 2017.
[51] Mr Matthew also asserts that the plaintiff’s AMP Capital bank account, from which the Kiwi Thunder debt arises, was, at the relevant times, his personal account. In support of that assertion, Mr Matthew exhibits copies of bank account statements for the AMP account addressed to him. On that basis, Kiwi Thunder submits that it is arguable that none of the payments were actually made by the plaintiff.
[52] In support of the contention that the AMP bank account was his personal account, Mr Matthew points out that on 4 October 2017 he personally received an inheritance from his mother in the sum of $150,000, which he paid into that account on the basis that it was in fact his personal account.
[53] However, I find that the evidence of Kiwi Thunder does not establish it has an arguable defence to the plaintiff’s claim. That is because:
(a)No bank statements have been provided to support the claim that Kiwi Thunder incurred direct costs of $97,330 for fireworks.
(b)In his first affidavit, Mr Matthew sought a review of the information supporting the liquidator’s claim. In the affidavit in response filed on behalf of the plaintiff’s liquidator, the liquidators confirm that they have reviewed their records and that there does not appear to be any errors or “double ups”. While the liquidator does have a responsibility and powers to investigate the plaintiff’s affairs, that has in fact been done
and Mr Matthew cannot say that he did not know about the alleged debt or have sufficient opportunity to explain and provide documentation in support of his claim that there is a genuine dispute. A formal demand was made before the statutory demand was issued.
(c)The AMP bank account (in the name of the plaintiff company) does specifically refer to fireworks payments to Pyro of $47,562.73 and to Weida of $52,421.77.
(d)Mr Matthew’s contentions about the AMP bank account (namely, that it was his personal account) are implausible and contradicted by the bank documentation itself. AMP provided the plaintiff’s liquidator with a print-out of the transactions in the AMP bank account on the basis that it belonged to the plaintiff. If AMP had considered that the AMP bank account belonged to Mr Matthew personally it would not have provided the print-out to the liquidator. Moreover, the print-out shows that the AMP bank account is in the name of the plaintiff. The fact that the AMP bank account statements were merely addressed to Mr Matthew was not unusual because he was the sole director of the plaintiff. Furthermore, it is also highly unlikely that a bank would unilaterally change the ownership of a bank account from the plaintiff to Mr Matthew and then, it must follow, change it back to the plaintiff following liquidation.
(e)It was not reasonable, in my view, for Mr Matthew to have concluded that the AMP bank account is no longer the company’s account. The fact that Mr Matthew deposited personal funds into the AMP bank account does not alter the position.
(f)The reality appears to be that the plaintiff needed a cash injection and that would appear to be the more likely explanation for the deposit of the personal funds. Whether that gives rise to equity or a shareholder loan does not matter; neither results in Kiwi Thunder no longer owing a debt.
(g)I also note that Mr Matthew has not filed as a creditor with the plaintiff.
[54] As to the third category of debt, namely the transfers, Mr Matthew’s explanation relates only to a part of that debt, namely $2,539.07. Mr Matthew claims that this was for a vehicle purchased by Kiwi Thunder on the plaintiff’s behalf with a subsequent reimbursement. In support of that proposition, he attaches Kiwi Thunder’s ANZ business current account. However, no details are provided to identify the vehicle to substantiate the allegation and no explanation provided as to why the plaintiff, itself in funds at the time, did not make the purchase directly itself.
Issue 5: The solvency of Kiwi Thunder Ltd
[55]Kiwi Thunder contends that it is not insolvent and relies on the following:
(a)Mr Matthew’s exhibits to his affidavit draft financial statements for the year ending 31 March 2018 showing that Kiwi Thunder made a net profit of $51,093 and has equity of $51,193.
(b)Bruce Dell Law currently holds the sum of $116,903 in its solicitor’s trust account as a bond for the liquidator’s claimed debt. In his memorandum dated 4 November 2019, Mr Steele recorded Bruce Dell’s undertaking to retain that sum pending the challenge to the debt being resolved. Bruce Dell further undertakes not to release the funds without the agreement of the parties or order of the Court.
[56] However, I find that there is good reason for questioning the solvency of Kiwi Thunder, and the evidence provided falls short of rebutting the presumption of insolvency established pursuant to s 287 of the Companies Act. My reasons for those findings are as follows:
(a)The draft financial statements exhibited to Mr Matthew’s affidavit are incomplete and unsigned. Furthermore, they are out of date and relate to a prior period. They do not, therefore, demonstrate that the company is currently balance-sheet and cash-flow solvent.
(b)In the draft financial statements provided, the largest current asset listed is a debt of $84,856 owed by the plaintiff. However, the liquidator cannot find any evidence of that debt and Kiwi Thunder has not filed
proof of debt in the plaintiff’s liquidation. If that debt is removed, then in 2018 Kiwi Thunder was in fact balance-sheet insolvent.
(c)The Bruce Dell trust account deposit of $116,903 does not establish sufficient cash-flow. Those deposited funds have been deposited in the trust account by another company, namely SWMH, itself the subject of an application for liquidation. In the event that SWMH is placed into liquidation, any payment made by it on behalf of Kiwi Thunder might be liable to be clawed back as part of the liquidation. In any event, it is the solvency of Kiwi Thunder that is at issue.
Issue 6: Reasons for delay and the overall interests of justice
[57] The explanation provided by Mr Matthew for the delay in filing the application, is exactly the same as that advanced in relation to Scotch Myst.
[58] For the reasons I have given above and in relation to Scotch Myst, I find the explanation for the delay in relation to Kiwi Thunder to be equally unacceptable.
[59] Again, the overall interests of justice do not favour a grant of Kiwi Thunder’s application.
Conclusion – Kiwi Thunder Ltd
[60] I find that Kiwi Thunder has failed to establish a proper basis for the Court to exercise its discretion under r 31.32 of the High Court Rules for an order allowing the draft statement of defence to be filed out of time.
Result
[61] The applications by Scotch Myst Ltd and Kiwi Thunder Ltd for orders extending time to file statements of defence are dismissed.
[62] In accordance with r 31.20 of the High Court Rules 2016, the defendant companies cannot appear at the hearing of the liquidation proceedings.
[63]I adjourn both proceedings to the Liquidation List on 29 November 2019 at
10.00 am, where the applications will proceed, in the normal course, on an undefended basis.
[64] Having successfully opposed both applications, I am of the preliminary view that the plaintiff is entitled to costs and on a 2B basis. If costs cannot be agreed, then memoranda are to be filed within seven days.
Associate Judge P J Andrew
4
2
0